SUPREME COURT OF QUEENSLAND

[1] HOLMES JA AND MULLINS J:  The appellant is the son of the respondents.  They are registered owners of property situated at Morayfield as tenants in common in the shares of 1/20 and 19/20 respectively.  The respondents hold their interest as joint tenants inter se.

[2] The respondents successfully applied on 2 December 2008 to the learned primary judge for appointment of statutory trustees for sale and consequential relief.  The orders made were:

1. Pursuant to section 38 of the Property Law Act 1974 (Queensland), Peter Lucas Chartered Accountant and Official Liquidator and Glen Peter Oldham be appointed trustee of the land situated at … Morayfield in Queensland … (“the Property”).
2. The Property vest in Peter Lucas and Glen Peter Oldham subject to encumbrances affecting the entirety but free from encumbrances affecting any individual shares to be held by them upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of rates, taxes, costs and insurance, repairs properly payable out of income and other outgoings in the following shares:

(i)  The Applicants 19/20

(ii) Leigh Anthony Ranger  1/20

3. That upon any sale by such trustee, either of the Applicants or the Respondent or all of them be at liberty to purchase such land upon terms that he or she shall not be required to pay any deposit and that he or she may set off against the purchase price, the whole of his or her share in the land.
4. The Respondent pay the Applicants’ costs of the application on a standard basis.

[3] At the conclusion of the hearing of the appeal from the decision of the primary judge, the court allowed the appeal and made the following orders:

1. On the appellant’s undertaking to prosecute action number 6207 of 2008 expeditiously and on his undertaking to remove forthwith the caveat on the property referred to in paragraph 1 of the orders made below, the appeal is allowed;
2. The orders made below are varied in this way:

order 2 is varied by the deletion of the words,

“in the following shares:

(i)The Applicants 19/20

(ii)Leigh Anthony Ranger    1/20”

and substitution of the following words:

“the Trustees are to pay 75 per cent of the said proceeds to the respondents and hold the remaining 25 per cent of the proceeds on trust until further order of a Judge of the Trial Division.”;

3. The following order is inserted:

“2A. The parties have liberty to apply on three days’ notice to a Judge of the Trial Division.”;

4. The orders made below are not otherwise varied;
5. The appellant is to pay the respondents’ costs of and incidental to the appeal, with the exception of the costs of the submissions and affidavits received from the respondents today.”

[4] These are our reasons for the making of these orders.

Summary of relevant facts

[5] The following summary of relevant facts is taken from the material that was before the primary judge. 

[6] The respondents provided some funds that were used by the appellant in 2002 to purchase a house property at Morayfield that was registered solely in the appellant’s name.  The respondents relocated from England to Australia and commenced residing in the house at Morayfield with the appellant in July 2003. 

[7] The parties established the gardens at the property and undertook renovations to the house.  The respondents contributed both financially and non-financially to these works.  In November 2003 the parties implemented a transfer of the ownership of the property from the appellant to the appellant and the respondents as joint tenants that was registered on 2 February 2004.  The property had been mortgaged to the bank that had provided finance to the appellant to assist in the purchase of the property.  The appellant had been making the repayments under that mortgage.  A new mortgage over the property was granted by the appellant and the respondents to the bank that was registered on 2 February 2004.  The appellant contributed to the repayments under this mortgage until some time in 2006. 

[8] The respondents continued to contribute both financially and non-financially to the property from 2004.  The relationship between the appellant and the respondents deteriorated and finally broke down when the appellant departed the house in November 2006 and the respondents continued to live there.  Prior to this happening, the respondents had been in the process of organising for the registration of title to be altered.  That process was completed after the breakdown in the relationship between the parties.  The appellant and the respondents signed a transfer of the property which transferred the title to the respondents as joint tenants inter se and the appellant as tenants in common in the respective shares of 19/20 and 1/20.  That transfer was registered on 19 January 2007. 

[9] The plaintiff lodged a caveat on the property on 2 April 2008, claiming that the respondents held their interest in the property on trust for the appellant.  In order to maintain the caveat on the title, the appellant filed the claim and statement of claim in proceeding 6207 of 2008 in the Supreme Court on 1 July 2008.  This proceeding included an allegation that the transfer of the property that was signed by the appellant in November 2006 was void for duress, undue influence or unconscionable conduct. 

Application before the primary judge

[10] The respondents’ application was supported by affidavits from the respondents that dealt extensively with their contributions to the property and their dealings with the appellant.  The appellant’s solicitor opposed the application on the basis that there was a pre-existing dispute between the parties about the beneficial ownership of the property, that the applicant had commenced a proceeding by claim and statement of claim (which had not been served) claiming that the respondents held their interest in the property on trust for the appellant, that a settlement conference had been held on 3 November 2008 which had not resolved the dispute between the parties, and that the proceeding had been incorrectly commenced by originating application.  The appellant’s solicitor did not seek to file an affidavit from the appellant verifying any of the factual matters raised in the statement of claim.

[11] The appellant’s solicitor informed the primary judge that the appellant consented to the sale of the property, but considered it was unnecessary to have trustees appointed for the purpose of sale and disputed the distribution of the proceeds according to the proportions shown on the registered title.

[12] The primary judge proceeded on the basis that the facts asserted in the statement of claim that had been filed and not served were not supported by any affidavit from the appellant and that there was otherwise no material from the appellant to contradict the affidavits of the respondents.  The primary judge was satisfied that the respondents as co-owners were entitled to have the discretion conferred by s 38 of the Property Law Act 1974 (Qld) exercised in their favour.

The appeal  

[13] For the purpose of the appeal, the appellant sought leave to adduce fresh evidence by way of a lengthy affidavit of the appellant that was responsive to the respondents’ affidavits.  This was the type of material that should have been filed by the appellant for the hearing before the primary judge to verify the claim that a dispute existed between the parties as to their respective beneficial interests in the property.  The court did not need to consider the fresh affidavit for the purpose of concluding that the appeal should be allowed.  It was necessary, however, to have regard to the appellant’s evidence about the details of his financial contributions to the property, in order to work out appropriate consequential orders, pending the resolution of the dispute between the parties about the beneficial ownership of the property.  The appellant is therefore given leave to file and rely on the affidavit of the appellant that was sworn on 8 July 2009.

[14]  It was appropriate that there was no challenge on the hearing of the appeal to the appointment of the statutory trustees for sale.  The material showed that the parties are co-owners and the right to seek appointment of statutory trustees for sale is an incident of co-ownership:  Ex parte Eimbart Pty Ltd [1982] Qd R 398, 402.  The main issue on the appeal was whether there was sufficient evidence before the primary judge to preclude the exercise of the court’s discretion to make a final order about the distribution of the net proceeds of sale of the property.

[15] Although the appellant’s statement of claim had not been served, it was before the trial judge and there was evidence in the respondents’ material and the appellant’s solicitor’s affidavit that the parties were in dispute about the matters the subject of the appellant’s proceeding and that a settlement conference that had been held one month prior to the hearing of the application had been unsuccessful in resolving that dispute.  In addition, the affidavits of the respondents referred to financial and non-financial contributions to the property made by the appellant which provided support for some of the matters raised in the statement of claim.

[16] The primary judge erred in not acting on this evidence of the existence of a real dispute between the parties as to their respective interests in the property.  This error was largely the result of the approach of the appellant’s solicitor before the primary judge.  In view of the dispute, it was precipitate to treat the registered interests of the parties as the relevant proportions for distributing the net proceeds from the sale of the property. 

[17] The evidence in the appellant’s affidavit that was filed for the purpose of the appeal as to his financial contributions to the property makes it unlikely that his beneficial interest in the property exceeds a one-quarter interest.  There is therefore no reason to keep the respondents out of receipt of three-quarters of the net proceeds of sale, pending the resolution of the dispute between the parties as to the beneficial ownership of the property.  As the appellant indicated to the court on the hearing of the appeal that he was prepared to prosecute expeditiously proceeding number 6207 of 2008, the court was prepared to vary the orders made by the primary judge to defer the final distribution of the net proceeds of sale to enable the appellant to finalise his existing proceeding.

Costs 

[18] After the court indicated the orders that were proposed to dispose of the appeal, submissions were invited on the issue of the costs of the appeal.  After a short adjournment on the day of the appeal, the solicitor for the respondents sought leave to file two further affidavits and tender a written submission on costs.  This material was unnecessary in view of the earlier indication that had been given by the court that it was proposing the appellant should pay the costs of the appeal, because of the way in which the matter had been conducted on behalf of the appellant before the primary judge.  That is why the court on the appeal was not prepared to amend the costs order made in favour of the respondents on the application before the primary judge.  The court therefore made the order that the appellant pay the respondents’ costs of the appeal, with the exception of the submissions and affidavits that the respondents tendered on the hearing of the appeal in relation to costs. 

[19] CHESTERMAN JA:  I gave my agreement to the orders made on 28 July 2009 because they were a just and sensible, as well as economical, solution to the problem presented to the Court on the hearing of the appeal.  The problem was articulated after the respondents’ application had been determined in the Trial Division and only took final shape during questioning of counsel for the appellant during the hearing.  But for the new expression of the appellant’s case, supported by his affidavit, I would have dismissed the appeal. 

[20] On the materials put before the learned Applications judge the order made by his Honour was entirely appropriate.  The respondents, who were the applicants, had sworn affidavits verifying their claim to 95 per cent of the net proceeds of sale of the house property which is now the subject of dispute between appellant and respondents.  The appellant did not give any evidence controverting the respondents’ claim, or advancing one on his own behalf.  He had, it is true, filed a claim and statement of claim which was described as a “draft” which he had supplied to the respondents’ solicitors in July 2008.  The statement of claim asserted that the respondents were bare trustees of their legal estate in the house property for him, as sole beneficiary.  His solicitor’s correspondence insisted that the whole of the net proceeds of sale be paid into his trust account, pending the disposition of the appellant’s claim.

[21] The respondents rejected the appellant’s claim at mediations, or settlement conferences, in November 2008.  The appellant did not thereafter serve the claim, or verify it by affidavit, by way of resisting the application for sale.

[22] The learned Applications judge did not regard the facts as establishing the existence of a dispute between the parties.  I would agree.  The appellant had made a claim which the respondents rejected.  The appellant then did nothing more.  It was a proper inference from his inaction that there was no dispute which the appellant intended to prosecute.

[23] Moreover, it is clear that had the judge made the order the appellant contended for, it would have worked injustice on the respondents.  The appellant’s claim was for the whole equity in the house.  Had the proceeds of sale been dealt with to abide the outcome of that claim nothing would have been paid to the respondents.  On appeal it was accepted that 75 per cent of the net proceeds should be paid to the respondents and that, at its highest, the appellant’s claim is for an equity equal to one third of the net value of the property.  It was only after the delivery of the appellant’s affidavit prepared for the appeal, and the questioning of his counsel, that it became apparent that the appellant did not claim the whole equity. 

[24] The learned Applications judge was clearly right in refusing to make any order that took into account the appellant’s claim as formulated in July 2008.  When the reduced claim was identified, and had the support of some evidence, it was appropriate to formulate a variation to the orders to preserve a fund to be paid to the appellant in the event that his claim succeeds.  The alternative, to dismiss the appeal and let the appellant bring an application for an injunction to preserve the fund he claims, would have put the parties to additional expense.

[25] I think it important to reiterate the warning given when the orders were pronounced.  The fund should be paid to the respondents if the appellant does not prosecute his action speedily.  It is a claim with substantial potential difficulties, the greatest perhaps being the evidence of what the parties actually intended to be their respective equitable interests in the property constituted by their execution of the transfer in December 2006.  Should that difficulty, or any other, make the appellant pause in the prosecution of his action, the respondents should receive the balance of the monies to which they are legally entitled.